Washington – Federal Reserve’s minutes from the mid-December meeting were released on Wednesday.
The meeting summary said that the participants agreed to a restriction policy stance that has to be maintained. This is until they gain confidence from incoming data that the inflation comes down to 2 percent. And this might take some time.
The meeting summary also stated,
“In view of the persistent and unacceptably high level of inflation, several participants commented that historical experience cautioned against prematurely loosening monetary policy.”
The higher rates will impact the costs of consumer business areas such as auto loans and mortgages. The interest rates are higher than the financial markets expected. Fed officials said the rates raised by a quarter-point higher, i.e., 5 percent to 5.25 percent, and they intend to keep it that way in 2023.
Fed Chair Jerome H. Powell said, “Historical experience cautions against prematurely loosening policy.”
Therefore, to control inflation, keeping the rates high is essential. This is so that inflation continues to go down.
Fed’s policymakers reached a consensus in minutes of the mid-December meeting to project a higher rate this year due to inflation and the slow economy. The increased rates could slow down the economy. Economists warn and expect the U.S. economy to enter into recession this year.
At a news conference, Fed Chair Jerome H. Powell expressed his doubts about the recession. The possibility of a recession is not known. He also added whether there would be a profound impact of it also can’t be predicted.
On Wednesday, Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, agreed to the Fed’s rate of 5.4 percent. He supports keeping the rates as is and raising them higher if the inflation shows no sign of reducing.